AI Drafter 
TaxTMI 
TaxTMI 
2018 (9) TMI 959
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....llowed as expenditure. Accordingly, an addition of Rs. 1,00,500/- was made on this account. Further, the department was also in receipt of a letter from Central Circle-4, Surat dated 30.11.2015 wherein it was informed that search operation had been carried out in Rajendra Jain group of cases and as per the statement recorded there, it was seen that this group was engaged in providing bogus bills for trading transactions on commission basis. A list of beneficiaries who had obtained accommodation entries by way of bogus purchase/s was attached with the communication received and it was seen that the assessee was one of the alleged beneficiaries in this regard by way of obtaining purchase bill of Rs. 30,01,478/- from M/s Avi Exports, Surat. It was also been noted by the Assessing Officer that Avi Exports was one of the proprietorship concerns of Shri R.S. Jain and Rajendra Jain group of cases. Accordingly, the assessee was asked to show cause as to why the purchase bill of Rs. 30,01,478/- obtained from M/s Avi Exports be not disallowed. Subsequently, the Assessing Officer proceeded to make a disallowance of Rs. 30,01,478/-. In addition, the Assessing Officer also made another addition....
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.... and ii) recording of satisfaction by the AO of other person; and iii) issuing notice u/s. 153C by the AO of other person is a jurisdictional issue and non satisfaction thereof would make the entire proceedings taken thereunder null and void. The issue of disallowance u/s. 37 regarding purchase and ROC fee can only arise for consideration if the proceedings u/s. 153C of the Act are upheld. 3) That the CIT(A) erred in confirming an addition of Rs. 7,50,370/-, which is 25% of the total purchase of Rs. 30,01,478/- from M/s. Avi Exports, Surat, being disallowed, in toto, by Assessing Officer arbitrarily and on mere suspicion and further ignoring the affidavits alongwith documentary evidences, as filed by Mr. R.S. Jain. 4) That the CIT(A) erred in confirming an addition of Rs. 100,500/- on account of ROC fee, being disallowed by Assessing Officer ignoring the fact that such entire incremental share capital was used for meeting the need for more working capital requirement and hence, was to be allowed as revenue expenditure. 5) That CIT(A) erred in not dismissing the ground of initiating penalty proceedings u/s 271(1)(c) of the Act." 3. The....
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....ejected merely on the basis of conjecture and surmises. Further, an affidavit of Mr. R.S. Jain was also rejected arbitrarily. It was submitted that it is settled law that affidavit is a valid piece of evidence and the same cannot be rejected summarily without assigning any reason. 3.2 It was further submitted that the statement given by Shri RS Jain was subsequently retracted by him this fact was also ignored by the Department and the addition was made entirely on the basis of the statement of Shri RS Jain which was recorded during the course of search in the premises of RS Jain group of cases. It was submitted that no addition can be made or sustained simply on basis of statement recorded at time of survey / search. In other words, in order to make an addition on the basis of surrender during search or survey, it is sine qua non that there should be some other material to correlate the undisclosed income with such statement. 3.3 The Ld. AR also submitted that the sales were accepted as genuine and, therefore, the purchase cannot be treated as bogus. 3.4 Arguing for the other issue before the ITAT, the Ld. AR submitted that the Ld. CIT (A) had erred in confirming an additi....
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....held that the assessee cannot be allowed the benefit of retraction of statement by Shri Rajendra Jain because the department had rejected the retraction of Shri Rajendra Jain in his case on the ground that Shri RS Jain had not filed the affidavit regarding retraction before the Investigation Wing. It is further seen that the assessee had filed the following documents before the lower authorities to substantiate the genuineness of purchase: stock register, quantitative reconciliation statement, copy of ledger accounts of M/s Avi Exports along with bank statement from which the payments for purchases were made. Apart from this, there is affidavit of Shri Rajendra Jain, proprietor of M/s Avi Exports which was filed in response to requisition u/s 133(6) of the Act and also confirmation of balance of the assessee company, copy of sales account regarding sales made to the assessee, copy of ledger account of the assessee in the books of M/s Avi Exports, copy of bank statement of M/s Avi Exports to substantiate receipt of payment against purchases, the retraction of statement by Shri Rajendra Jain regarding statement made after search and as filed before the DCIT, Surat and affidavit of....